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Four dead animals - two possums and two birds - were found during a routine check inside the Canterbury beauty spot's reservoir supply last month.
Testing confirmed there was enough chlorine in the water to kill bacteria, but there was still a possible protozoa risk which chlorine will not kill.
It meant the Canterbury medical officer of health said to boil water used for drinking, food preparation, utensil washing, brushing teeth or ice.
Residents in Akaroa and Takamatua have had to boil their drinking water since February 12.
But Christchurch City Council head of three waters and waste Helen Beaumont yesterday said she hopes that the boil water notice could be lifted by the middle of the month.
It will come as a relief to Banks Peninsula residents, as well as businesses, who have already been hit by the Covid-19 global pandemic, and a sudden dearth of cruise ships coming to the area.
The council has been rushing to set up a temporary bypass for the contaminated water reservoir at L'Aube Hill Reserve.
Fourteen 30,000-litre plastic tanks and associated piping will be installed near the reservoir.
A construction team is welding and laying about 200m of new piping needed to connect the local water treatment plant to the temporary tanks, and then to connect the tanks to the Akaroa/Takamātua water supply network.
The cause of the compromised water supply – the possums and birds – were able to get into the reservoir through a previously unsecure overflow pipe.
The council says they have since secured the overflow pipe with a mesh seal.
"Once the tanks and piping are in service, we will isolate, drain and inspect the reservoir," Beaumont says.
"The inspection will determine whether we proceed to clean, upgrade and reinstate the reservoir within the water supply network, or whether we demolish it and construct a new one while the bypass remains in place.
"We expect to be in a position to complete the bypass and lift the boil water notice by the middle of March."
Yesterday, Beaumont also revealed that a new reservoir would cost in the order of $1.3m-$1.5m.
However, given the nature of the Akaroa network, the council says it would prefer to build two reservoirs to "provide some much needed resilience".
Beaumont says a "very high level estimate" is $2m-$3m for a new pair of reservoirs – and would take between two to five years.
A full report into the incident will be released once the ongoing investigation is complete.